I like writing stuff, and sometimes people like reading it.
OK — you’ve made your decision. You have evaluated the Mission Matrix and decided that high-touch, enterprise sales is your path to success, or at least the cohort you’d like to address today.
If you are an engineer-turned-CEO-founder, you have no idea what you are in for. It is much harder than you think it is, it will take much longer to sign the deal than you think it will (by integer units of yearly quarters), and NO — you do not have the right decision makers in the room — nor will you know who they are for quite a while. So, how do you win?
First, structure your team. If you have no experience selling into enterprise, your first reaction is “yeah, but how hard can it be? It’s all expense accounts and rental cars, right?”. Sure. It’s not hard, just like managing a kindergarten is not hard. But it requires a level of patience you cannot comprehend until you do it for the first time. Most likely, you are not prepared, and you do not possess the temperament to be successful. Hire someone who has been there — this is one of those rare times that the island truly can only be found by those who have already been there.
So step one, assemble a solid, battle-proven team. At least one person, your VP of Sales, needs to be this.
What sales method to use? I propose one below, but there are so many to choose from — Challenger, Solution, Shipley — all are great sales methodologies. Any and all are good, you go ahead and do you. At the end of the day, you need to be consulting more than selling, and your expertise needs to match their subject matter expert’s (SME) expertise.
For a modern approach, Account Based Sales (ABS) is actually pretty good, and offers an excellent high touch model. So let’s stick with that here. I won’t tell you how many of each to get (but here is an excellent post to that effect), but you will need the following roles:
However, the ABS model is likely insufficient, as the aforementioned SME is likely not one of the three above. If you can, get an AE that is also an SME, but you will still likely need someone dedicated to targeted and custom customer demonstrations. So, add the following:
All in all — what ratio to go with? I’ll do another blog post for that one day, but this is something you need to figure out. BTW, your SDRs (maybe) and AEs (certainly) might be aligned along industry verticals as well, assuming you have a horizontal product.
The biggest trap you face here is that you, the CEO, likely believe you can do this yourself. You can’t, you need a team. You’ll know why if you have done this before. If you haven’t done this before, you will know why soon (*soon means after 6–18 months, assuming you are successful).
To sell into enterprise successfully, you need to identify the following roles in your customer’s organization:
Why do you need them? See the PWIN and playbook below. But basically you need to know who you need to be talking to and convincing. Chances are, if you are talking to just one person who says “I am the decider”, they are not the decider, and they may not even be aware of their own company’s internal procurement process. They are even likely new to this.
Are there really this many people involved? Yes, at least. Remember there is typically more than one person in each role, especially as the bid value increases in magnitude.
Every industry has its own spend cycles, and expect to see alignment with their fiscal year. Generally that means you can expect to see rapid movement at the start of Q1 as that year’s strategic objectives are funded and embarked upon, and they will slow around Q4 because they probably spent all of their money. The time between Thanksgiving and New Years is typically dead space, especially for US companies. For European companies, summer crawls because everybody is enjoying their vacations. And for some reason, Q3 is always slow.
But when are Q1 .. Q4 for your customer? Exactly! You need to know this. Some companies may push purchasing decisions after a quarter, for instance if they want to maximize half-year or annual profits (you know the four tenets: invoice early, pay late, buy low, sell high). Conversely, companies may use quarter boundaries to negotiate discounts … which is all fair, choose whether you want the money or the timing, it is rare that you get both.
What does this mean for your sales cycle? It means often there is little that you can do to shorten the sales cycle, since there are likely corporate factors gating the expenditure of funds, especially if they are sourcing an initiative for next year’s budget. How long will it take then? Expect 6–18 months.
6–18 months? Yes. Can it happen sooner? Yes, but not likely. The only way I know to shorten the cycle of enterprise sales is to not engage in enterprise sales — make the customer buy the product like everybody else (but maybe package it nicely for them, e.g. AMI, Kubernetes, etc). However, that is not how large companies buy.
Furthermore, companies and enterprises often have spend limits associated with absolute contract value, and the higher the cost, the more people need to be involved in the decision to approve and select the vendor — and this is usually done sequentially. Translation — more time…. Here is an excellent example of spend limits that I found.
So be sure to account for this appropriately in your time to revenue predictions (assuming you win the business in the first place).
Large companies are often going to have procurement procedures related to authorization limits as well, such as procurement exercises larger than a certain amount require an open solicitation process. Impact? More time, and now your competition is notified. Know these limits, and do your best to stack the requirements in your favor.
In fact, as my former boss and mentor used to tell me, “If you didn’t write the requirements, you already lost.”
What makes Enterprise sales unique is a lot of things, but what all enterprise deal generally have in common is a complex buffet of deliverables. Those are generally going to include the following:
Yes, this was really four items, but trifecta was much more poetic, agreed?
Enterprise sales requires an objective measurement methodology to gauge the “doneness” of the deal or proposal. For table stakes, every sales opportunity becomes an opportunity only when you have established Need, Schedule, and Budget (NSB). But not every NSB looks the same, so how to you compare two opportunities? Enter the Probability of Win (PWIN) Calculator:
I put together an example for you. In combination with the playbook below, you will subjectively score yourself in each of the categories, and from that, you’ll start developing an objective score across multiple opportunities. That’s right — I can’t remove all of the subjectivity, but I can make it objective as possible. It is a delightful trick that actually works quite well by aligning effort across your sales team and designing a common scoring system. After all, it’s not a sport unless you are keeping score.
I purposefully left out a detailed description of the categories in the example. The spreadsheet holds the formulas, you should be able to reverse engineer them. Don’t stress on the specifics, develop your own PWIN calculator that makes sense for you.
OK, we are finally at the main course! What is the playbook? Well … you have to develop it. This is one I have used, and it works well. It is an iterative process where you gather information, analyze information, create/adjust proposal, adjust PWIN, send to customer, repeat.
You can read all about it, but here are the key takeaways:
But you are going to have to develop something, the process will be iterative and lengthy.
Option 1: Pick a number. $100/hr. Done.
Option 2: Calculate a number. This is going to follow a formula such as:
Hourly Pricing = S * (1+GA%) * (1+OH%) * (1+P%)
S = Salary per hour
GA = General & Administrative costs as a percentage of revenue
OH = Overhead costs as a percentage of revenue
P = desired profit
Joe earns $90,000/yr. He is paid for working 52 weeks a year, 40 hours per week, so 2080 hours total. (This includes the vacation time he is also paid to take). Your company’s G&A is 75% and OH is 12%, and you want 30% profit. Therefore your hourly rate is going to be:
90,000/52/40 * (1+0.75) * (1+0.12) * (1 + 0.30) = $91.87/hr
If you go the route of Option #2 (which I highly support, since it ensures a certain level of financial sophistication), then use a role-based salary average from some accredited source instead of Joe’s actual salary. (Yes, you’ll find terms like G&A, OH, etc., used in US government contracting guidance, but don’t let that scare you off the concept, they are wonderful tools).
Option #2 also gives you a range to use in your discount tactics (see above) that you can trade for value-in-kind. e.g. if you remove your profit, your raw cost for labor is $70.67, which you can’t charge less than. But, you could give them a 5% discount to get those marketing rights…
Or more specifically, line-item discounts. Enterprise deals are big and complex, and there is a natural human desire to discount in volume. Read these next lines closely:
DO NOT DISCOUNT.
If you must:
Only offer line item discounts, that you offer to all of your customers. In fact, you should probably publish them along with your price list.
You have worked hard to earn the right to close this deal. 10% off the price isn’t going to make it (or break it), unless you need to price match your competitor, but then you are likely just column fodder, because your competitor will see and raise your discount. Instead, do the following:
Generally, I don’t like these discounts to add up much beyond 30% of the total cost, for obvious reasons. There must be specific value for you to give up money, and it must come as trade-in-kind. In the examples above:
If you get to this stage, congratulations! You could be as little as three months away from closing the deal! You will need to work with your legal team and their legal team to negotiate the minutae. Here is what you should do:
If you are doing this cold turkey, you must have a rolodex already populated with close contacts in the industry you wish to sell into. Perhaps you are a former executive, otherwise your VP of Sales is.
Additionally, look for companies that have strategic investing arm or innovation center. This generally means that the company (a) recognizes and publically acknowledges they have need for product not developed by them; (b) recognizes their procurement procedures are onerous and anathema to startups; and © have formally funded and organized programs to bring technology from small businesses into their portfolio by removing obstacles in the procurement process.
Automotive companies are a great example of this, several that I work with have innovation centers whose charter is this specifically.
Use a proper Customer Relationship Management (CRM) system that is designed to manage your sales pipeline and customizable against your sales playbook. Your VP of Sales should tell you what she used in the past, just go with it. CRMs are worth every dollar you spend. You wouldn’t ask your engineers to work without an IDE, would you? Don’t get cheap on your sales team — saving pennies here will cost you pounds later. (There are many options available to you, my advice is to index on functionality, not cost).
There is a lot to unpack above. Your VP of Sales should walk you through all of the above. It may come to be that the instructions above give you reason you reverse your decision to sell to enterprise directly. Perfect! Find a channel partner instead! I highly recommend this.
Also, is the above post applicable only to certain types of products? Sure, probably. My background is enterprise software, so I know it applies there. But the sales methodologies I mentioned in this post are product agnostic, and they all generally take the same approach. So I think you’ll be fine if you use this to guide your playbook creation.
I will update this post from time to time, so please come back. Looking forward to your feedback!
I am an Executive-in-Residence (EIR) at Vonzos Partners. I would love to hear your thoughts, feedback, and insights. Get in touch at:
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